Polygon, a Layer 2 scaling solution for Ethereum, has gained significant traction in recent years due to its ability to address the network’s scalability and transaction fee issues. Currently, Polygon utilizes a Proof of Stake (PoS) consensus mechanism, but it is planning to transition to zkEVM Validium in its upcoming Polygon 2.0 upgrade. This shift promises to bring about significant advancements in scalability, security, and user experience.
Polygon, a prominent Layer 2 scaling solution for Ethereum, currently operates as an EVM-compatible sidechain known as Polygon POS. However, the network is poised for a significant transformation with the introduction of Polygon 2.0. This major upgrade will mark a shift from the Proof of Stake (PoS) consensus mechanism to zkEVM Validium, paving the way for enhanced scalability, security, and user experience.
Table of Contents
Polygon’s Operational Mechanism
- Layer-2 Solution: Polygon is a Layer-2 solution built on the Ethereum blockchain. Its goal is to address existing issues on the Ethereum network, such as slow transaction speeds, limited scalability, and high fees.
- Plasma Chain and Mainnet Integration: Initially, Polygon used a plasma chain to process transactions on separate sidechains. These transactions were then aggregated on the Ethereum mainnet. This approach improved performance and reduced transaction fees for users.
- Current Approach with ZK-Rollups: Currently, Polygon utilizes ZK-rollups to combine a large number of off-chain transactions into a single transaction. This mechanism not only enhances transaction privacy but also ensures privacy for users.
- Heimdall Architecture: Polygon employs the Heimdall architecture to select block producers (validators) randomly. This enhances scalability and network security within the Polygon Proof-of-Stake (PoS) ecosystem.
Polygon 2.0 Plan
To unify the ecosystem, the Polygon project’s development team has proposed Polygon 2.0 as an enhancement to the Polygon network, encompassing its operating mechanism, tokenomics, governance structure, and more. This upgrade plan will be implemented in phases, as follows:
Polygon Labs has proposed a significant upgrade to the Polygon PoS network, transitioning it to a zkEVM Validium L2 secured by Zero Knowledge Proofs. This transformative change aims to enhance security while enabling seamless interoperability with EVM chains within the Polygon ecosystem. The deployment and testing phase for zkEVM Validium is scheduled to commence from November 2023 to January 2024.
To unify the ecosystem, Polygon 2.0 has been proposed by the development team as an upgrade to the Polygon network, covering aspects such as operational mechanisms, tokenomics, governance structure, etc. This upgrade plan will be implemented in phases, including:
Upgrade Polygon PoS to zkEVM Validium: Polygon Labs has proposed upgrading Polygon PoS to zkEVM Validium L2 secured by Zero Knowledge Proof. This change will enhance security while facilitating interoperability with EVM chains on the Polygon network. The deployment and testing of zkEVM Validium will take place from November 2023 to January 2024.
Upgrade Polygon 2.0 Structure: Once the zkEVM Validium L2 chain is complete, Polygon 2.0 will consist of four protocol layers: Staking Layer, Interop Layer, Execution Layer, and Proving Layer.
Token and Tokenomics Changes: To operate the Staking Layer, the project also proposes changing the MATIC token to POL. Additionally, the tokenomics will be revamped for the Polygon 2.0 upgrade.
Polygon 2.0 Governance Structure: With Polygon 2.0, the Polygon community will be granted full control over the entire Polygon ecosystem through a governance system, including protocol governance, smart contract governance, and community treasury governance.
With the structural changes in Polygon 2.0, each new interaction layer will be responsible for a specific process as follows:
Staking Layer: Polygon’s PoS layer will use decentralized validators and allow them to “Re-stake” MATIC and support various networks. This mechanism operates similarly to how EigenLayer has developed previously on Ethereum.
Interop Layer: This is the interaction layer that facilitates cross-chain messaging to enable users to experience the benefits of operating on one chain while utilizing multiple chains, such as the ability to transfer native Ethereum assets across chains.
Execution Layer: This is the interaction layer that empowers chains within the Polygon 2.0 ecosystem to support the creation of transaction batches in sequence.
Proving Layer: This is the interaction layer that uses ZK proof protocols to generate transaction proofs inside and outside (including cross-chain transactions) for all chains within the Polygon 2.0 ecosystem.
Polygon Ecosystem
Polygon zkEVM
Polygon zkEVM is a Layer 2 solution utilizing Zero Knowledge Rollup technology, specifically zkEVM (zero-knowledge Ethereum Virtual Machine) type 2. According to Vitalik Buterin’s classification, type 2 of Polygon zkEVM will be fully compatible with EVM but requires some minor modifications before executing transaction commands. However, the current state of Polygon zkEVM is type 3 (EVM-compatible) and will need some time to upgrade to type 2 as planned.
Polygon Miden
Polygon Miden is a Layer 2 scaling solution using zk-STARKs technology to scale Ethereum and support the EVM language, making it easier for developers to build smart contracts and DApps. Additionally, the team will launch the Miden Virtual Machine (Miden VM), the first virtual machine based on STARK security technology, to automatically provide execution proofs for transactions.
Polygon ID
Polygon ID is an infrastructure solution for identity that is extremely useful for developers in identity verification, compliance support, access control, and other tokenized features. Polygon ID can be applied in KYC processes on CEX exchanges, DeFi platforms, and fiat on-ramp and off-ramp payments.
Polygon CDK
Polygon CDK is a toolkit introduced by Polygon Labs that allows developers to build Layer 2 solutions on Ethereum using Zero-Knowledge Proof mechanisms. Polygon CDK is an improved version of Supernet (Polygon’s previous chain development toolkit) designed to connect with the Shared ZK bridge, increasing interoperability between different chains.
Active Projects on Polygon
The Polygon ecosystem is incredibly diverse, encompassing numerous projects across various sectors, including:
DeFi: QuickSwap, AuraSwap, Celer Network, …
B2B: FIDA, Creol, Krowd Innovation, …
Tools: LayerZero, L2 Beat, Envio, …
NFT: Async Art, Autograph, NFT Yard, …
Gaming: Soccer Arena, MetaName, Black Eye Galaxy, …
Basic information about MATIC token
Here’s a pie chart illustrating the allocation of the Polygon token (MATIC):
- Ecosystem: 23.33%
- Foundation: 21.86%
- Binance Launchpad: 19%
- Team: 16%
- Staking Rewards: 12%
- Advisors: 4%
- Private Investors: 3.8%
What is MATIC Token Used For?
MATIC is the native token of Polygon and is used in the following scenarios:
- Transaction Fees: MATIC is used to pay transaction fees on Polygon.
- Staking and Governance: Users can stake MATIC to earn rewards and participate in network governance.
- Incentives: The Polygon team uses MATIC as an incentive for projects operating within the ecosystem.
Where Can Investors Trade MATIC?
Currently, investors can trade MATIC tokens on:
- Centralized Exchanges (CEX): Binance, Coinbase, OKX, HTX, …
- Decentralized Exchanges (DEX): Uniswap, PancakeSwap, QuickSwap, …
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Where Can Investors Store MATIC Tokens?
MATIC tokens adhere to ERC-20, BEP20, and SPL standards, allowing investors to store them in wallets such as MetaMask, Phantom Wallet, Trust Wallet, Backpack, etc. For convenience in trading, investors can also store MATIC on exchange wallets that list this token.
Development Roadmap
Some upcoming updates and developments for Polygon include:
- Introduction of Polygon 2.0.
- Transition from PoS to zkEVM Validium.
- Launch of Polygon Miden.
- Introduction of POL tokenomics.
- Launch of the governance system.
- Release of the Polygon Chain Development Kit (CDK).
Development Team
Key members of the Polygon development team include:
- Jaynti Kanani: Co-Founder of Polygon.
- Sandeep Nailwal: Co-Founder of Polygon.
- Mihailo Bjelic: Co-Founder of Polygon.
Investors
Polygon has successfully raised over $450 million through four funding rounds, with participation from investment funds including SoftBank, Sequoia Capital, CoinFund, among others. Additionally, individual investors such as Mark Cuban and John Lilic have also invested in the project.
Partners
Polygon has partnerships with projects and companies from both the Web3 and Web2 worlds, including:
- Web3: Coinbase, ImmutableX, Ankr, …
- Web2: Google, Meta, Fox, Nike, Adidas, …
See more:
Summary
Polygon is a Layer 2 solution that utilizes the Proof of Stake (PoS) consensus mechanism, developed to address Ethereum’s issues of speed, transaction fees, and scalability. With the planned upgrade to version 2.0, Polygon promises to be a prominent Layer 2 solution in the near future.
